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    Question

    As per IRAC (Income Recognition and Asset

    Classification) norms, an asset is classified as a 'Loss Asset' when: 
    A It has been an NPA for more than 3 years. Correct Answer Incorrect Answer
    B The collateral value has eroded by more than 50%. Correct Answer Incorrect Answer
    C It is identified as such by the bank or internal/external auditors or the RBI inspection, but the amount has not been written off. Correct Answer Incorrect Answer
    D The borrower has fled the country. Correct Answer Incorrect Answer
    E The borrower's business has been shut down for 6 months. Correct Answer Incorrect Answer

    Solution

    A Loss Asset is one where the loss has been identified by the bank or auditors/RBI, but the amount has not been written off wholly. It is considered uncollectible.

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